A major change in tipping law came into effect on 1 October that now requires restaurants to pass on 100% of tips and service charge payments to their employees. The Employment Act and the statutory Code of Practice (on the fair and transparent distribution of tips) applies to restaurants, pubs and bars, as well as many other service and hospitality based companies.
The new law is expected to benefit more than three million service workers in England, Scotland and Wales, including about two milliion waiting staff, in order to provide better ‘transparency and fairness’ around how tips are distributed, explains Tom Moyes, partner at Blacks Solicitors. Staff will also be able to request a breakdown of how tips are being handed out every three months.
Kate Nicholls, the chief exectuive of UK Hospitality, says that businesses have been ‘gradually getting ready for this’, by adjusting their payment structures to better support their employees. The initial proposal for the law was first proposed by government officials eight years ago.
Minister for Employment Rights, Justin Madders, explains: ‘When you tip someone for good service, you expect them to keep all their tip. They did the work – they deserve the reward.’
‘This is just the first step of many in protecting workers and placing them at the heart of our economy. We will be introducing further measures on tipping to ensure workers get their fair share of tips.’
However, many smaller restaurants who are already struggling with a rise in costs, from food inflation to energy bills, may have to think about how they can recoup costs elsewhere.
Saxon Moseley, head of leisure and hospitality at consultancy RSM, says: ‘Those that have been using the service charge to pay staff or to partly offset their wage bill are still going to have to pay their staff, but now won’t be able to draw on this cash fund.’
The new law is predicted to boost workers’ earnings by £200 million across the sector, combating the small percentage of businesses that still withold employers wages to pay their bills.
Eager to support restaurants? Get involved with October’s foodie happenings, from the best Oktoberfest celebrations in London to this full line-up of Halloween events and parties taking place in 2024.
